There are lots of great things to enjoy in our businesses- POOR cash flow is not one of them! In order to keep your cash flow flowing, it is important that your merchant account be set up properly. Our team is in the habit of doing these things but just in case you accidentally chose a different processor, keep these things in mind!
When setting up a merchant account, underwriting departments use a series of guidelines to 'approve' the account for credit card activity.
Knowing your approval parameters can really help you to make the right choices when processing your credit card payments. For example, if your account was approved to process transactions as high as $5000- then a wise and informed merchant will push the PAUSE button before processing transactions larger than the approved high ticket amount. Credit card processing agreements clearly state that operating outside of the approved parameters could result in funds being held for as long as 6 months. (I am using the term 'clearly', loosely as you would need to employ the services of your magnifying glass to find it in most cases!)
- Credit Worthiness
- Industry Risk Factors
- Financial Stability
- Prior Processing History
- Account Details (billing time frames, delivery information, refund/return policies)
At TMC, we add the account parameters to your installation checklist as a visible reminder. Over the years, business owners can forget that their account has certain processing parameters so if you are processing with us- call and we will remind you. If you are processing somewhere else (you can call us to fix that too!)- call your processor and ask them for your parameters.
Here are the major points of concern:
Annual Processing Volume- how much do you anticipate processing in credit cards over the course of the year. This is a ball park number so if you guess 20K and you only do 15K- no worries. If, however, you guesstimate 20K and you do 200K- (time to celebrate AND) be prepared to be asked additional questions to support your glorious business success.
Average Ticket Size- the amount you process on each individual transaction is a very Important number because if you exceed the number by too much, the risk department may begin to wonder if A- you are selling the product or service you were set up to take payments for and B- if you are fiscally strong enough to handle disputes on the larger transaction sizes. Risk assessors can require the return of transactions that are well outside your approved amounts and believe me this can be a PAIN!
Product / Service Type- if you set up a merchant account for your retail bicycle shop, you cannot use the same account for your woodworking business. Each account is set up with a certain SIC code and product set. Accepting credit cards for products or services outside of your approved SIC code can also result in disputes and delayed funds.
Card Acceptance Method- If you are approved to accept cards with an 80/20 mix (80% card swiped 20% key entered) for example, red flags will go off in the system if you begin key entering all cards. You do not have to be exactly perfect as far as the mix goes- but you need to snuggle up close. Remember that key entered transactions carry more risk.
Advance Payments/Deposits/Drop Shipping- These are the types of transactions that make the fraud department very nervous. They should not be processed unless your account was specifically approved for them.
If you have made changes to the way you process or you need to process cards well in excess of your parameters, just call our office PRIOR to processing the transaction(s) in question and we can help you take the necessary steps to handle the single transaction and move to review your account for parameter expansion.
Communication is the key to making sure your monies keep on flowing to your checking account without delay. So keep up the great work, know your parameters, inform your staff and Keep the Cash Flow - Flowing!